Role Of Government In The Economy
Government involvement in the economy is to aid in correcting market failures. They need to correct situations where private sectors cannot get the most out of the value they could generate for society. This includes the provision of public goods. In addition, it includes the internalization of externalities and the imposition of competition. That being said, many companies accepted a wider government involvement in a capitalist economy.
Government activities have a strong effect on the US economy in several areas.
Promoting growth and stabilization
Perhaps most essentially, the government is guiding the overall speed of economic activity. They are trying to keep steady growth, high employment levels and price stability. By managing the money supply and controlling the use of credit, it can slow down or accelerate the growth rate of the economy. In the process, it affects the level of prices and employment.